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Different Ways to Invest in Real Estate

Different Ways to Invest in Real Estate

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by September 20, 2016 Uncategorised

You don’t need to buy available Homes For Sale London Ontario to invest in real estate. You also don’t have to buy a commercial building or an apartment complex to gain exposure to this sector. What are some options for those who only have a few hundred or a few thousand dollars to invest in the residential or commercial property?

Put Your Money in a REIT

A real estate investment trust (REIT) acts like a mutual fund and an ETF at the same time. The simplest explanation of what a REIT does is collects money from a group of people and uses it to invest in different types of property. Some REITs may decide to invest in residential mortgages while others may decide to invest in commercial properties that have long-term leases with major corporations. For instance, the trust may decide to invest in properties owned by companies with AAA credit ratings or mall spaces rented by anchor tenants.

Make Peer Loans

Peer lending allows individuals to ask other individuals for personal loans that allow them to use the money however they see fit. Some loans are ultimately used to either purchase a property or renovate a property that the borrower already owns. Prior to making a peer loan, you generally have access to the borrower’s credit score and credit report. You may also be notified of any prior late payments or loan defaults. This makes it possible to make an educated investment, which lowers your risk of not getting paid back.

Act As a Hard Money Lender

Those who are looking to buy a house may not want to go through the traditional mortgage process or can’t get a loan to buy a distressed property. Therefore, they will ask you for a short-term loan while the house is being fixed up. After the rehab is complete, the owner will get a mortgage for the appreciated value of the property and you get paid back with those proceeds.

Hard money lending can lead to high returns on your investment as interest usually compounds daily or weekly. You also get to put a lien on the house until the loan is repaid, which makes such a loan a safe option for most individuals. If this is something that you are interested in doing, it is important to know that most borrowers won’t borrow less than $5,000 at a time.

Those who are interested in diversifying their portfolio while outperforming the market may want to consider real estate. Whether you have $500, $5,000 or $50,000, there are options available to you that fit your investment goals and objectives.

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